By Neil Halligan
Parent company of Emirates Airline recorded second highest profit ever of $1.5bn, paid $700m in dividend to the Dubai gov't
Emirates Group, the parent company of the Dubai-based airline, announced a 34 percent rise in profit, the second highest in the airline’s history, thanks to lower oil prices which helped to offset the impact of the runway closure and a strong US dollar.
While the group, which is made up of Emirates Airline and aviation services firm dnata, recorded a profit of $1.5 billion, its 27th consecutive year in profit, on the back of a 10 percent yearly rise in revenue to $26.3 billion.
Emirates Airline itself posted a profit of $1.25 billion for the financial year to March 31, as revenue rose 7 percent to $24.2 billion, the group's chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum told a news conference in Dubai on Thursday.
Sheikh Ahmed said there were three key factors that affected the group’s performance during the year.
“Throughout the year we had to respond to global and operating challenges, and he to be alert and steer our business at a steady speed. ‘Keeping a steady compass’ is the core theme of our annual report. Last year, there were three key events that impacted our performance: oil prices, the 80 days runway closure at Dubai International airport and the strong US dollar,” he said.
He added the drop in oil prices offered some relief against challenges in other areas, but it still remained the highest cost that the airline has. “The drop in oil prices was a welcome relief on costs. We only felt the benefit in the second half of the year but our net saving from the drop in oil prices was AED2 billion ($545 million). Fuel drop from 39 percent of operating costs in our previous financial year to 35 percent last year, however it was still our biggest cost ($7.8 billion),” he said.
The closure of the runway had a negative impact on the airline’s profits during the year, which saw aircraft grounded and dnata set up ground handling operation at Al Maktoum.
“The 80-day runway closure at Dubai International airport impacted both Emirates and dnata. Emirates had to ground 19 aircraft and reduce capacity by nine percent,” Sheikh Ahmed said.
“dnata had to manage its operation around the construction, at the same time had to also set up an operation, the first major ground handling [operation] at Al Maktoum International airport to support those airlines who had to move their operations there during this time. As a group, the estimated impact on revenue was AED1.7 billion ($463 million),” Sheikh Ahmed added.
He said the “strong rise of the US dollar against currencies in many of our key markets” had a $412m impact on the group's bottom line.
Despite that, the airline increased its average seat occupancy to 79.6 percent, up from 79.4 percent in the previous year.
dnata recorded a profit of $247 million, its highest ever profit for 56 years, with revenue of $2.8 billion, an increase of 36 percent.
The dividend paid to Investment Corporation of Dubai, the emirate’s sovereign wealth fund which owns the group, amounted to $700 million, an increase of 150 percent compared to the $280 million last year.
No surprise here - EK maintains a Fuel Surcharge Fee which is the same as when aviation fuel was double the price. Significant windfall for EK and when challenged on this no-one in EK is prepared to talk. I've tried, I know.
Sir Tim, when will you pass on this saving to your customers through a fuel surcharge commensurate with the prices you pay?
Well done Emirates! Congrats!
But please do not take this success for granted as the Emirates Airlines in-flight services are becoming really bad these days. I have experienced some rude remarks and lethargic services of late. My friends and family coming in from US have also complained that Emirates services are going down. Please brush up. We are proud of Emirates and would love this to continue!